Immunobarrier technology can protect transplanted islets from being destroyed by allorejection and autoimmunity. Considerable progress has been made in using simple alginate microcapsules. The goal of this proposal is to develop strategies to optimize transplantation outcomes with the expectation of encapsulating insulin-producing cells derived form precursor/stem cells. 1. Determine the factors that influence the survival of encapsulated islets. In spite of improved results with islet encapsulation remarkably little is known about the fate of encapsulated islets. We hypothesize that contributors to islet failure include trauma from islet isolation, central necrosis of large islets, and activation of a proinflammatory state that can activate the innate immune system and enhance the adaptive immune reaction. Learning more about these factors should lead to important new strategies to improve outcomes. 2. Use of a perfluorocarbon emulsion to improve oxygen delivery to transplanted encapsulated islets. Limited oxygen availability is a major problem for encapsulated islets, as this leads to a major loss of b-cells after transplantation. Large islets with diameters over 200 mu/m are especially vulnerable due to central hypoxia that leads to cell death. It is predicted that the use of a perfluorocarbon emulsion in capsules for improving oxygen delivery will prevent b-cell loss to hypoxia. 3. Develop methods to produce optimal sized islet cell aggregates that will preserve b-cell mass and limit the proinflammatory response. We predict it will be possible to determine the optimal diameter of islet cell aggregates that will prevent central hypoxia and improve packing density. Modeling should serve as a guide to optimal packing density for islet cell aggregates in capsules. In addition, it should be possible to create tissue culture conditions that will limit the proinflammatory state of aggregated cells. These predictions can be tested with dispersed rat islet cells that are aggregated in a controlled and defined manner. This work should serve as a guide for the encapsulation and transplantation of xenogeneic islets cells or insulin-producing cells that should eventually be produced from precursor/stem cells.